Greg Wright: Potts wields axe to give Morrisons a fighting chance

Morrisons chief executive David Potts
Morrisons chief executive David Potts
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SO what’s the best management style? Evolution or revolution?

I’ve never met David Potts, but I’m pretty sure he favours the latter.

The new Morrisons chief executive has been described as a “force of nature” who has wasted no time in stamping his authority on the troubled grocer. He’s undoubtedly the boss, and knows his own mind after 40 years in retailing.

He’s already axed some of Morrisons’ top brass, as he builds a leaner business that is in a better shape to fight the discounters. He’s a man who believes that actions speak louder than florid mission statements.

He also believes in placing more staff - as opposed to misting machines - on the shop floor.

He’s only been in the job a fortnight but his strategy could not be clearer. He wants Morrisons to move away from overly-complex management structures and gimmickry, and focus on customer service.

A more timid soul might have disappeared for a month to formulate a strategy. This is not Mr Potts’ style, and Morrisons’ shareholders and customers should be grateful.

The decisive action he’s taken will have persuaded many that Morrisons really does have a future after all.

Let’s briefly run down some of the things he’s done over the last two weeks. All of these changes could be filed under the heading: “Sounds like common sense to me.”

On his first day in the job, Mr Potts pledged to seek the views of shoppers to help improve Morrisons’ performance. He asked his head office staff to help out in supermarkets this Easter, so they can “listen hard” to customers and shop floor staff. Mr Potts is leading by example. He’s working in a store over Easter.

Checkout teams are being asked to use their eyes and common sense, instead of a computer system, to ensure that customers don’t become frustrated by large queues.

All these announcements were a welcome break with the past. Many critics believed that the previous CEO, Dalton Philips, had never really developed a rapport with Morrisons’ traditional customers.

But then, more controversially, Mr Potts started to wield the axe in Morrisons’ corridors of power.

He has dispensed with the services of five directors on the 11-strong management team, and, on Sunday, it was confirmed that he was axing around 20 bosses in the next tier of management.

It’s been a traumatic time for all those who are losing their jobs. But, on the evidence of the last two weeks, Mr Potts isn’t the sort of manager who will shirk away from tough, and potentially unpopular, decisions.

The respected City analyst Clive Black of Shore Capital believes Morrisons’ management needs a team with a “new intensity”, who will operate the chain more effectively.

He added: “The cultural change in this respect is considerable, with ‎Morrisons needing fewer and better management in place, with more resource freed up to be utilised where it matters; the stores.”

Mr Potts faces colossal challenges. Morrisons recently slumped to a full year loss of £792m, and the discounters are still snapping at its heels.

As Morrisons observed in its full year results, real disposable incomes are still short of pre-2008 levels.

Customers are unlikely to return to their old shopping habits, and Morrisons may be forced to cut prices and margins in the face of intense competition.

So customer service is the key to unlocking Morrisons’ potential. Ask a few simple questions: Did you enjoy your last trip to Morrisons? If not, what went wrong? And what can Mr Potts and his team do to put it right?

Mr Potts will be judged on how well he answers that last question.